Harley 3Q Income Tumbles..

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Harley 3Q Income Tumbles..

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Sign of the times..

Harley Davidson:

NEW YORK - Harley-Davidson Inc. said Thursday its third-quarter profit fell sharply, as the slowing economy and tighter credit markets took their toll on sales of its iconic motorcycles.

By DAN STRUMPF, AP

http://www.ibtimes.com/

October 16th 2008 @ 04:27 pm EST

The Milwaukee-based company also cut its earnings outlook and estimate for motorcycle shipments for the rest of the year, in a sign the global credit crunch will continue to weigh on earnings. Chief Executive Jim Ziemer said the global economy and consumer concerns are expected to hobble the company into 2009.

"While we can't control the external forces at work in the economy and credit markets, or other underlying causes, Harley-Davidson is extremely focused on appropriately managing the many aspects of the business," Ziemer said in a conference call with analysts Thursday morning.

Harley said its earnings for the quarter ended Sept. 28 dropped 37 percent to $166.5 million, or 71 cents per share, from $265 million, or $1.07 per share, in the same quarter last year. It was the company's fifth straight decline in quarterly earnings.
Revenue fell 8 percent to $1.42 billion from $1.54 billion in the third quarter of 2007.
Excluding Harley's acquisition of Italian sports bike maker MV Agusta Group, the company earned 78 cents per share, Goldman Sachs analyst Patrick Archambault said.

On that basis, analysts expected a profit of 79 cents per share on revenue of $1.42 billion, according to a survey by Thomson Reuters.

Harley also reported lower shipments of its widely recognizable bikes. They fell 14 percent to 75,704, though international shipments crept higher in a sign the company is still making inroads into overseas markets.
Ziemer said a third Harley dealer opened its doors earlier this month in mainland China, and the company continues to explore ways to expand into the Indian market.
However, Ziemer said sales have slowed more than expected in some markets such as Switzerland and Italy--an indication the global slowdown is starting to impact Harley's performance overseas.

"We think Europe is trending in the negative range at this point, yet our contacts mentioned European inventory levels have been increasing throughout (the third quarter)," Citi Investment Research analyst Gregory Badishkanian said in a note to investors Thursday. Badishkanian has a "Sell" recommendation on Harley shares.

These have been difficult times for Harley, whose sales of its high-end bikes are closely tied toconsumer confidence, and it has not proven immune to the tightening of the credit markets. Retail sales at Harley dealers fell 10 percent during the quarter, the company reported.
Ziemer sought to reassure investors that credit is still available for customers despite a global squeeze. Harley-Davidson Financial Services, which helps customers finance motorcycle purchases, is in "stable" shape, he said.

"Prudent management and customer access to credit will continue to be priorities at HDFS," Ziemer said in a statement.

However, the company reported higher delinquency rates during the quarter and said it has been forced to raise interest rates. HDFS President Saiyid Naqvi said rates now range between 7 percent for the most qualified customers to 22 percent for the least qualified, with even higher rates at some dealers. That's about a percentage point higher on each end than a year ago, the company said.

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